Novell Creates $50M Java Development Fund

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February 25, 1998 (12:00 AM EST)

By Lee Copeland,

Novell CEO Eric Schmidt said the company has allotted $50 million to invest in companies developing Java-based Internet applications for NetWare.

The Internet fund is for second- and third-round investments to companies developing Java-related software for Novell's network servers, said Schmidt in a conference call with analysts.

"We are going through the due diligence of funding companies we feel will expand the success of the Novell platform," said Schmidt. "It is not primarily a financial mechanism, although money is good. We really want to make sure that the ecosystem, all those companies that need a little bit of help, to get excited about building on top of the infrastructure that Novell provides, are properly attended to. And one way to do this is to have equity participation."

Novell expects to distribute its NetWare 5.0 final beta in April, said Stewart Nelson, vice president, Novell Product Group, in the conference call.

"The technology is right on track for a summer release," said Nelson. NetWare 5.0, a linchpin in Novell's effort to spark sales growth, is currently in its second beta. Novell was hoping to distribute the final beta at the Salt Lake City Brainshare show which runs March 22 to 27.

Novell officials spoke with analysts after the company announced better than expected financial results for its first fiscal quarter ended Jan. 31.

Novell earned $14 million on sales of $252 million in the quarter. The company posted earnings per share of 4 cents. The Wall Street consensus was 2 cents per share, according to First Call.

Novell said 68 percent of sales in the quarter was derived from new product licenses, while 32 percent came from purchasing upgrades. The company did not differentiate whether the percentage of new revenue was from new or existing customers.

Novell's earning per share numbers were twice as good as the previous quarter, though revenue was lower. Novell closed its fourth fiscal quarter of 1997 with earnings per share of 2 cents and revenue of $269 million. Novell attributed lower revenue in this quarter to currency weaknesses in the Asian market.

"Our first fiscal quarter results reflect the solid progress we've made in stabilizing Novell's business and executing an aggressive recovery strategy that we put in place last year," said Schmidt. "We've made further progress in all three areas of our strategy: our business model, our management focus, and our product direction."

In the first quarter, Novell shipped several new products: BorderManager FastCache, NDS for NT, Netscape for NetWare servers, and year 200 solutions for NetWare and ManageWise.

Last August, Novell instituted a restructuring program and promised tighter internal controls. Novell's chief executive credited the positive income statement to company restructuring.